Lease or finance a home question

Question

I now own a house my father had when he passed away 2 yrs ago and am wondering what my best option is for dealing with it with a potential buyer. Should I lease to own with me being a landlord or should I finance the home for the buyer by changing the name on the deed and have them pay me monthly until its paid for or until they are approved for a loan to pay it off. I'm concerned about the long road and getting it back if they don't pay and if I'm renting/leasing any legal matters I may encounter with me being the landlord. Any suggestions??

Answer 1

I would cont' to rent to them if they pay the rent on time. Increase the rent yearly as law allowed. If they don't pay, give a 3 day notice to pay then file eviction. I would either "rent" or "sell" but not the "lease to own" nor "owner finance" situation. If they can't qualify for a loan from the bank, what make them be able to qualify your finance. You should protect your right. If you changed the name on the deed it become "their" house and when they fail to pay you can't evict but have to go through the process of foreclosure. It's not something you can do by yourself.

Even the renter's father living next door should not be a reason for you to give in. Be strong and the law will back you up as a LL. If you want them out without a reason, send a 30 day or 60 day notice for them to move out.  

Answer 2

There are thousands of wonderful home buyers looking for a nice house today.  There are also some terrible buyers.  I will never "lease to own" ever again.  I never imagined there could be such scoundrels in the world until i did that a few times.    After you have sold 10 houses, you can "owner-finance".  Until then, it would be a huge mistake.  I did that. One person filed for bankruptcy to stop me from getting the house back (he didn't make his monthly payments).  6 months later i got a letter saying that the bankruptcy had been cancelled and i could take the house back but i had to wait the 90 days to do it.  On day 89, he declared bankruptcy again.  He did this 4 times.  It took me 2 full years to get my house back and it was ruined.

Sorry for the lecture but please just sell the house to someone who can get a loan and pay you off in 30 days. Or lower the price a lot and sell it for cash.  You can close that sale in 5 days. /

Answer 3

I agree with Ed Atun.  It would probably be a huge mistake to go either of the two ways you have mentioned.  The very fact that the buyer is asking for seller financing says that they can't afford to or are unable to get conventional(bank) financing for any number of bad reasons.   Tread very, very carefully.  I personally would just pass them by--it is the only surefire way to avoid getting burned.

Answer 4

Or there’s a third option where the buyer gets their own loan, you get paid immediately and are out of the picture.

For either of the options you mentioned, I’d get with a real estate attorney who can advise you on the options and draft a sales agreement for you.